LONDON (Reuters) -Sterling was set for its biggest weekly fall against the dollar since December on Friday, as investors looked ahead to a Bank of England (BoE) interest rate decision next week.
The slide in the pound comes after a period of relative strength for the currency, which has gained this year on bets the BoE will keep rates higher for longer than its peers.
The British public's expectations for the pace of inflation in 2024 have fallen over the past three months, a BoE survey showed on Friday, which may reassure policymakers who are considering when to cut rates.
Sterling was last broadly flat versus the dollar on the day at $1.27535 and was on track for a 1% weekly fall. The euro gained 0.1% versus the pound to 85.40 pence.
Economic data this week showed Britain's housing market picked up in February, while the overall economy grew 0.2% in January from a month earlier, after slipping into recession in late 2023.
The BoE is expected to keep rates on hold at 5.25% next Thursday, with market pricing favouring the BoE cutting rates slightly slower than the European Central Bank and Federal Reserve this year.
"We think the BoE will steer clear of indicating when it will likely start cutting, retaining its neutral guidance from February," BNP Paribas (EPA:BNPP) economists said in a note, adding they expected the first BoE cut in June, with a total 1 percentage point reduction over 2024.